The Tax Ombudsman fielded 2376 complaints against the Australian Taxation Office in the six months to September, up 74 per cent from the same period in 2025 and 180 per cent above the same period two years ago.
Debt collection and payment-related matters each accounted for 19 per cent of complaint investigations from April to September, the agency said.
"Our latest complaint data shows more people are struggling due to the ATO's debt collection activity or interest charges or simply need to resolve delays to payments they are due,'' Tax Ombudsman Ruth Owen said.
"At a time when many Australians are facing financial distress, we are seeing increased complaints about how the ATO is collecting tax debt owed and how interest is applied to the debt, often making the amount due impossible to pay back."
In response, an ATO spokesperson said the tax office had only received 1358 complaints over the same period, as the ombudsman's figures included cases that were resolved without any ATO involvement or that related to the Tax Practitioners Board or state tax issues.
The ombudsman only investigated 501 complaints out of 2376 it received and found in most cases, the ATO had acted appropriately.
In 63 per cent of debt collection-related complaints, the agency found the ATO acted reasonably, down nine per cent from the same period last year.
Complaints about penalties and interest made up 18 per cent of grievances, up from 13 per cent a year ago.
Amid rising inflation and interest rates, tax liabilities were adding to mounting debts owed by taxpayers and small businesses, the ombudsman said.
Taxpayers also relied on tax refunds to maintain liquidity or pay other bills.Â
"This is likely to partially explain why we have seen an increase in complaints, alongside the fact that the ATO has had to ramp up its debt collection activity to reduce the size of its collectable debt book," the report said.
The ATO was owed $54.2 billion in outstanding tax debt in 2024/25, according to the Australian National Audit Office.
Debts owed by small businesses amounted to $35.9 billion, an increase of $19.4 billion from 2018/29.
Following a backlash to proposed tax hikes for discretionary trusts, the ATO's announcement that it would ban credit card payments has further dented relations between the government and the business community.
"When we get feedback from businesses around the country, I think they are feeling under pressure," Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, told Politico's Canberra Playbook podcast.
"They're feeling that they're really struggling on a range of fronts, and they just see a range of decisions from government that feel disconnected from the objectives that they're trying to achieve."
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